@Mike we're going to be opening up to public beta as soon as humanly possible. We know that a lot of people don't have the luxury of getting invites to these kinds of sites, but our goal was to simply keep the flood gates somewhat closed, so as to not provide a terrible user experience to everyone that was already in there. Now that we've solved a good amount of our scaling issues, we'll be opening up soon!
I don't think that Google's App Engine directly competes with Amazon S3, I would say it competes more with Amazon's EC2 as S3 is not a way to actually deliver a web app, it's simply a storage mechanism.